The Recovery Rebate Credit is a new tax credit added to the 2020 IRS Form 1040. The stimulus payments were an advance, or pre-payment, of this credit. Credits – even when they come in advance - are not taxable on your return.
By completing the Recovery Rebate Credit section in TaxAct, you can verify that you received all the funds you qualified for. For most, the amounts received were accurate.
If you do have more stimulus money coming to you, the remaining amount will be added to your tax refund. If you owe taxes, the remaining amount will be subtracted from what you owe. TaxAct will calculate your Recovery Rebate credit to make sure you received all the stimulus money you qualified for.
Reporting the amount of stimulus money you received helps you make sure you got everything you qualified for. If you received more than you qualified for don't worry - you don't have to pay it back.
Since both stimulus payments were sent out before the 2020 tax return was filed, the IRS used 2019 tax return information as qualification criteria. If your tax situation changed in 2020, you may qualify for more than you received. The birth of a child, a divorce, a big raise (or the loss of income), or other life changes could also impact your qualifications.
Remember, you won't have to pay back any overpayment and stimulus money is not taxed, so you have nothing to lose by reporting stimulus payments.
TaxAct asks a few quick questions about your stimulus payments. Once you answer those questions, TaxAct will let you know if you qualify for additional stimulus funds or if you received the correct amount.
Contact us at (319) 373-3600.